The global food trade has been estimated at $1.5 trillion. With the world population expected to reach 10 billion by 2050, the ever-increasing demands for food will require a more efficient, transparent and reliable supply chain.
Acting as one of the core pillars of our global economy, the supply chain industry is composed of a diversity of players. They need to comply with national and international standards, communicate across different platforms and adhere to strict deadlines.
An intricate web of planning and logistics make up the network between a company, its supplier and the end receiver. In this fast-paced industry, delays in shipping, faulty products and delivery failures can result be costly. Take the food industry, for example. It is estimated that food fraud is a global problem that costs $40 billion.
As a result, consumers are demanding safer and healthier foods from suppliers they can trust, and stricter norms are being applied. Every step of the supply chain is vital to the economy, but as a whole, it’s an industry needing much improvement.
The evolution of the supply chain core process – technology to the rescue
New technologies are an ally in replacing obsolete practices. Businesses are leveraging blockchain, artificial intelligence and internet of things to tackle the main issues plaguing the supply chain industry: lack of communication, delays in shipping, faulty products, delivery malpractices and inefficiency in processing.
One of the preferred technologies at the moment is blockchain. As the demand for real-time data increases, many are turning to the blockchain to manage the supply chain for more visibility, accountability and reliability.
Alongside other technologies, they can be applied to help comply with standards, maintain competitiveness, improve quality, and increase efficiency.
The applications of blockchain technology in the supply chain
Blockchain is being utilized to add an extra layer of security in the supply chain, particularly when it comes to ensuring quality through tracking and efficient management.
Since all information stored cannot be tampered with, the blockchain provides an immutable pool of data that becomes the backbone of a supply chain process. Also, blockchain-powered tracking in the supply chain helps companies recall batches if needed and enables customers to check the provenance and shipping condition of the product.
The blockchain solutions budget allocation for the supply chain was estimated at $510 million, making the industry highly profitable.
Countries around the world have also been exploring blockchain in the supply chain. Last year, the Commonwealth Bank of Australia (CBA) tracked a shipment of 17 tonnes of almond from Australia to Germany using the Ethereum blockchain. Similarly, the Abu Dhabi National Oil Company (ADNOC) partnered with IBM to develop a blockchain-based solution to provide transparency and security to the management of oil transactions in the supply chain.
IBM has been providing blockchain solutions that impact all facets of the supply chain, with a particular focus on logistics. Through the “Food Trust” project, they’re enabling full control over visibility and accountability within the foods supply chain. The system will allow companies, such as Walmart, Carrefour and Nestlé, to provide their customers with details of where their food came from using the blockchain.
Communication – a key player in supply chain logistics
In an environment where data is of extreme importance, blockchain in being leveraged to facilitate data-driven ecosystems and make communication between players more effective. A steady stream of information is crucial, and any flaws directly affect logistics companies, carriers, the producer and the customers.
The Finnish development agency, Kouvola Innovation has been working since 2017 on a blockchain-based logistics application called SmartLog. It allows logistics companies to access a single blockchain to get access to all the information regarding the movement of containers in the European Union, thus countering the use of different software.
Scheduling services is a sector of the supply chain that is often overlooked, but it’s the backbone of the industry. Scheduling and planning errors can result in the loss of billions, and given the diversity of players involved, the application of such a solution would revolutionize the industry.
GS1, the global non-for-profit leader behind the creation of the barcode, is developing a blockchain solution alongside The Blockchain Xdev and IRT SystemX to provide a standardization of the communication process in the supply chain.
France in the forefront of a supply chain blockchain consortium
GS1 leveraged their experience in the field to form a consortium. The goal is to make the scheduling process smoother, trustworthy and more secure.
We had the opportunity to talk to Stéphane Cren, Head of Innovation at GS1 France, about the organization’s vision for the future of supply chain and blockchain. He explained that one of the pains in the supply chain is the practice of “multi-homing”. That happens when different entities use different software to connect to one or various networks, to communicate with each other or access databases.
Their ultimate goal is to provide interconnection. Different supply chain players can access the decentralized platform to communicate, schedule services and share documents. In addition, trade, payments and transactions will be facilitated in the platform.
They’re challenging traditional practices in the industry by offering a sustainable, scalable and neutral communication protocol, not only on the regional but also on the international scale.
As of now, the consortium allows all players in French’s logistics to converge on one platform using one language.
“Avec l’Ecole des Mines de Paris, nous avons mené une étude conjointe qui démontre que nous pouvons éliminer un camion sur quatre sur les routes, si on interconnecte les agenda tels qu’ils sont sur le marché.”
“Alongside the Ecole des Mines de Paris, we conducted a research proving that, only by interconnecting agendas of the industry players, one truck out of four could be off the road,” said Stéphane Cren about the benefits of implementing blockchain in the supply chain.
GS1 leverages their weight to provide universality and confidentiality
The consortium fills a significant gap in the industry and tackles the issue from a broader standpoint. Stéphane stressed the importance of a mindful collaboration between the technology and supply chain, bearing in mind the industry’s main challenges in developing a well-targeted solution.
GS1 ambitions to integrate universality into the logic of developing a blockchain solution. Through the use of one solution to interconnect different platforms, they’re standardizing, optimizing and automating scheduling and communication services.
Stéphane emphasized that for this solution to be accepted and even more, to be used by all actors in the sector, it is mandatory to keep the confidentiality of specific data sets. For that, the blockchain is a vital instrument.
To enclose business competitivity and respect business confidentiality, all sensitive data points (such as the identity of the players, and reasons for cancellation) will be encrypted from the start. In this manner, all players’ liability will be kept anonymous, and only the critical information needed to complete the transaction will be visible.
GS1’s vision of seeking business openness is translated into the project.
“It is engraved in our organization’s DNA that GS1 has to seek business openness. What we want is to engineer a global performance that has a greater impact on cross industries and verticals. GS1 is ready to partner up with anyone that is driven by the same values.” – Stéphane Cren, Head of Innovation at GS1 France
The first proof of concept (POC) has been recently delivered to GS1. Designed to demonstrate the idea to prove its practical potential, the PoC was executed in France. It focused on interconnecting two data sources inside an agenda management protocol: agenda planning, truck tracking & ETA and delivery timestamping. This Ethereum blockchain-based booking tool backed up by cross-players data will enable its users to optimize their schedule thanks to a heavy internal algorithm.
This solution will provide relief to big companies by cutting down costs and time, as well as an accessible and secure way for smaller family businesses to enter the supply chain world.
Ivan Baturone, CIO/CDO, Innovation Manager Extended Supply Chain, Michelin, speaking at the session “Tracking Goods, People…. and Code? Exploring blockchain applications in the transport industry’”, during the OECD Global Blockchain Policy Forum 2019.
The next steps will be to take the consortium to the international scale. While standardization on such a scale is a herculean effort, this project holds potential. Powered by GS1’s global expertise and reputation as the actor behind the scannable barcode on all products, one can expect the same success, credibility and reputation to be translated here.